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How To Create An Exception Report
What Is An Exception Report [+Template]
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What Is An Exception Report [+Template]

An exception report is a project management tool to help you calmly and systematically handle issues during your project.
Laila Robinson
This template was built with Coda, the all-in-one doc that brings words, data, and teams together. Play with the template below or copy the doc to save your edits.

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Lumber shortage
Lumber is sitting on ships and we can’t build without the lumber.
Concrete foundation cracking
Due to inclement weather, the concrete foundation we poured is starting to crack.
Delay in city council permit
City council delayed our permit to build homes
Issue X
Issue Y
Issue Z
Title
Short title of issue
Lumber shortage
Status
Is this issue resolved?
No
Description
Longer description of issue
Lumber is sitting on ships and we can’t build without the lumber.
Owner
Buck Dubois
Acknowledged
Date
11/17/2021
Root Cause
Supply chain issues
Impact on project cost
Expected to cost $150,000 in delays
Impact on project dates
Pushing back completion date by 3 months
Recommendations/Options
Use alternate materials
Wait for lumber
Source new suppliers
Resolution
Decided to source new suppliers
Lessons learned/best practice
Account for delays in lumber
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After months of meticulous planning and proposal revisions, you’ve finally submitted a brilliant project proposal to your management team.
Fast forward a month.
You’re now in the thick of execution and something seems…off.
Budgets affected by a sudden price raise from one of your long-standing suppliers.
A critical project member hit by a death in the family, causing delays in your timelines.
These extraordinary factors weren’t part of your project planning.
But they’re now happening in real-time, and now as the project manager, you need to act to save your project, answer to your management team, motivate your team members and save your project from going off the cliff.
All while remaining calm yourself.
Enter a project management tool designed for this specific purpose: the exception report.

👉 Get started with this exception report template.
Copy this template
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Make a copy of this template and start using this free exception report template for your next project.

What is an exception report?

Ideally, meticulous planning accounts for everything that could go wrong.
As a project manager, you pride yourself on your ability to collaborate across multiple teams and adapt to changing circumstances.
But sometimes, issues happen beyond your control.
And adapting to unforeseen circumstances is part of the reality of trying to manage projects in any organization.
The exception report is your project management tool to track these issues in your project, systematically investigate them and improve future processes to prevent these issues from occurring again.
A well-crafted exception report identifies performance outliers that fall outside a certain expectation baseline. It empowers project teams to course-correct during a project to prevent any further mishaps or delays.

Some fundamental examples of project management and financial metrics tracked by exception reports:

Time spent in reality versus project time estimates
Overall project cost and budgeting
Quality and risk management
Output and production levels
Financial performance metrics like cash flow, budgeting, revenue and expenses

Why exception reports are important:

Exception reports are a powerful tool for analysis in project risk management and problem solving.
They help you:
Understand where something went wrong
Allow process improvements for current and future projects
Filter out the tasks requiring immediate action

Exception reports promote calm problem solving during a stressful time. They’re fantastic for you as a responsible project manager to handle these stressful situations and manage stakeholder communication in a professional and calm manner that speaks well of your project management skills.

4 benefits of exception reports for project managers

1. Gives a fantastic overview of your entire project plan

Exception reports give both your project and management teams a summary report of a project’s progress at a high level. It helps record any issues that may arise during the project while providing a systematic breakdown of the issue and proposed solutions.
Think of the fundamental
5W’s
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(What, Why, When, Where and Who) and 1H (How) project management processes.
Each of these questions should have factual answers. You should also be able to back these answers up with empirical data.
Introduce exception reports as part of your business process reporting or within your project management dashboards for an excellent overview of the strengths and weaknesses of your project plan. Plus, if you add our
SIPOC template
⁠
to your arsenal of PM tools, you’ll list all your business processes and be able to detect any issues or low-value areas.

2. An early warning system and overview of pressing issues for decision makers

Time is usually of the essence when you’re in a situation needing an exception report.
Do your best to prioritize going through the analytical process necessary to get an overview of pressing issues within your project. Exception reports act as an early warning system. You can flag issues proactively to help decision makers know when the organization is at risk of missing key performance targets.
This also helps your management team know when they need to take corrective action or grant approvals to empower employees to investigate further.

3. Equips your project team with a better understanding of why deviations occurred

Having issues arise during a project with tight deadlines is usually fraught with stress and pressure.
Exception reports help return to the fundamentals and handle with these issues in a calm, systematic manner. It provides a step-by-step framework to perform a thorough investigation to capture the background, establish the facts, field recommendations and discuss any implications to your project plan.
This process helps you handle powerful emotions from team members and keep your team focused while assuring project stakeholders that you have the situation under control.
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A sample exception report (
Source
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)

4. Insight into how to improve the process workflow for subsequent projects

By documenting lessons learned through current exceptions, your project team will have stronger insights on how to avoid similar issues from arising again.
You could use the data and insights gained from creating an exception report to drive change in your project management processes.
Better still, documenting lessons learned benefits teams both at the strategic and operational level, if not your entire organization.

Step by step guide on what you can include in a sample report:

Unsure of how to structure a good exception report?
Let’s break down the process of writing an exception report that covers all your bases and impresses your management team.
Feel free to tweak this format for your own needs.
Set the context: Outline your project aims and where you currently are in that process
Describe the situation: What’s happened in the project that’s causing you to write an exception report?
How and why have you veered off-course? Provide some analysis on the cause and perceived impact of your exception.
How have these exceptions affected the project? Think like budgets, timeline or resource allocation, for starters. Present these rationally and analytically
What are your recommendations to course-correct and solve issues? Present a few concrete options for your management team on how to proceed. Tip: present this as systematically as possible. For example, for any proposed solution, show what the associated costs are, potential risks and highlight the benefits.
What is your top recommendation? Based on your recommendations, present which option would you recommend taking forward.
What’s the period of change? Based on your recommendations and issues, document how much more time, resources or budget you will need to course correct. This helps you manage expectations.
Document lessons learned as a result: Analysis here will help both your project team and future project teams learn from issues here to take into other projects. Use lessons learned data to improve your project processes. Or build a new and improved process from scratch.
After your exception report is complete, create an exception plan that updates or replaces your previous project plan using your project management tool of choice.

👉 Get started with this exception report template.
Copy this template
⁠
⁠

Make a copy of this template and start using this free exception report template for your next project.

How to generate an exception report with Coda

Step 1: Fill out high-level project info

At the top of the main
[TEMPLATE] Your Project
⁠
page, you should add high-level details about your project like the project owner, project name, and project summary. You can add additional project identifier information here as needed. This information gives your teammates and project stakeholders a quick overview of the project that has issues.

Step 2: Add issues to exception report

Below the high-level project information, you’ll see an Add Issue button which adds new issues to the
Exception Reports
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table. The sample issues listed are laid out in a magazine-like layout. When you click each issue in the left-hand sidebar, you’ll see all the details about the issue like the Owner, Impact on Project Cost, etc. Fill out as much as you can for the issue so that your teammates have a complete picture of the exception report.

Step 3: View status of issues

One of the columns in each issue in the
Exception Reports
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table is the Status field. Depending on what you pic for this status, the issues show up on a kanban board layout in the
Issue Status
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page. This gives you and your teammates a more interactive view of the issues and their current resolution status. As issues are addressed, you can move them to the “In Progress” list. When you click on each card in this page, you’ll see the full details associated with that issue.

Exception report FAQs

What is an example of an exception report?

One of the most relatable applications of exception reports is by credit card companies to identify potentially fraudulent transactions.
Ever got a cautionary notification when you spend more than usual in one transaction on your credit card urging immediate action?
That's exception reporting at work.
Beyond this, distribution businesses use exception reports to reconcile inventory numbers. They identify differences between physical inventories and numerical data in inventory databases.
These two numbers should match. If there are discrepancies, store managers can investigate further and drill down to determine the cause of the issue.
Project managers also rely on exception reports as part of their management report to identify issues like an overran budget or incomplete tasks.
Outside the realm of project management and procurement, human resource teams employ exception reports to employee assessments to identify if employees fall above or below performance expectations and recommend corrective action.

Who uses exception reports?

Project managers use exception reports to summarize and report on exceptional issues during a project’s timescale; especially when these issues can pull a project off-track.
Data quality or regulation teams also use exception reporting to flag instances when customer records are incomplete or duplicated. For example, missing address information can cause late deliveries, undelivered invoices and payment delays, escalating to impacting costs or performance in the long run.
Accounting and finance teams also use exception reports teams in their regular analysis to find actual costs that are higher or lower than project costs across all accounts and entities, preventing potential budget shortfalls.

What is an exception report in finance?

Financial professionals use exception reports to track discrepancies in business revenue and expenses.
Monitor large variances in your budget (for example, a business cost that’s drastically higher or lower than the amount projected) and flag these out for further investigation.
Doing this regularly as part of a regular business review will help prevent cash flow surprises, save money and help you take a more proactive approach to budget planning or cash flow management.


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